Hong Kong shares were lower at midday Wednesday, dragged down by weakness in China Construction Bank (CCB) and snack maker Want Want China after block sales of their shares hurt their sectors.

But shares of CCB shares were only off 2 per cent, compared to the up to 5 per cent discount offered by Bank of America as it ended an eight-year investment that yielded a paper profit of more than five times the original cost. Traders said this pointed to robust demand.

The Hang Seng Index, which rose the past four sessions, was down 0.4 per cent at midday to 22,308.4 points. The China Enterprises Index, which closed on Tuesday at its highest since June 6, fell 0.6 per cent.

The CSI300 of the leading Shanghai and Shenzhen A-share listings was down 0.1 per cent, while the Shanghai Composite Index was flat.

Of course, demand for the CCB placement was so robust ... The surprise here is that (Bank of America) is selling at such a low level

Hong Hao, BoCom strategist

“Of course, demand for the CCB placement was so robust,” said Hong Hao, chief strategist at Bank of Communication (BoCom) International. “The surprise here is that (Bank of America) is selling at such a low level.”

Wednesday losses pulled CCB off Tuesday’s two-week closing high. Its H-share listing is now down 6.6 per cent on the year, compared to the 1.7 per cent loss on the Hang Seng benchmark and 10.9 per cent tumble on the China Enterprises Index.

The CCB block deal weighed on its “Big Four” Chinese banking peers in Hong Kong. Industrial and Commercial Bank of China, Bank of China and Agricultural Bank of China (AgBank) each shed 0.6 per cent.

Want Want China declined 1.6 per cent after Uni-President China sold its remaining 46.26 million shares at HK$11 per share, a 3.8 per cent discount to its Tuesday HK$11.44 closing price.

In a note dated Wednesday, BoCom’s Hong said investors should position themselves for outperformance in late-cycle Chinese industries such as energy, materials and industrial goods.

These are sectors were hard hit by China slowdown concerns, but better economic data out of China and the U.S. suggests investors may have been overly pessimistic about the Chinese economy.

A private survey on Wednesday showed growth in China’s services sector hit a five-month high in August, after three other purchasing managers’ index (PMI) surveys this week pointed to a pick-up in activity at factories and service firms in the world’s second-largest economy.

“China is not without issues, but the key is to figure out how much pessimism is already in the price,” Hong wrote.

“Of course, relative valuation (for China) can sink even lower. But with the positive steps that China is undertaking, an imminent collapse seems less and less likely, especially in the near term,” he added.

Some sectors mentioned in Hong’s note rose on Wednesday. China Railway Group climbed 1.6 per cent, while Jiangxi Copper gained 1 per cent.

Gold miners were also stronger as gold prices rose on concerns of a possible US military strike in Syria. Zijin Mining rose 1.1 per cent in Shanghai and 1.5 per cent in Hong Kong.